PROMISSORY NOTE

Principal     Loan Date  Maturity   Loan No   Call/Coll Account Officer Initials
$6,000,000.00 08-15-2003 09-01-2004 92018206                     636AW   /s/AW

   References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.
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Borrower: I/OMAGIC CORPORATION(TIN: 88-0290623) Lender: UNITED NATIONAL BANK
          1300  WAKEHAM  AVENUE                         INTERNATIONAL DEPARTMENT
          SANTA  ANA,  CA  92705                        855 SOUTH ATLANTIC BLVD.
                                                        MONTEREY PARK, CA 91754
                                                        (626)281-9575
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Principal Amount: $6,000,000.00 Initial Rate: 4.750% Date of Note: August 15,
2003

PROMISE TO PAY. I/OMAGIC CORPORATION ("Borrower") promises to pay to UNITED
NATIONAL BANK ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Six Million & 00/100 Dollars ($6,000,000.00) or
so much as may be outstanding, together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan on demand. Payment in full is due
immediately upon Lender's demand. If no demand is made, Borrower will pay this
loan in one payment of all outstanding principal plus all accrued unpaid
interest on September 1, 2004. In addition, Borrower will pay regular monthly
payments of all accrued unpaid interest due as of each payment date, beginning
October 1, 2003, with all l. subsequent interest payments to be due on the same
day of each month after that. Unless otherwise agreed or required by applicable
law, payments will be applied first to any accrued unpaid interest; then to
principal; and then to any late charges. The annual interest rate for this Note
is computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime rate as
published in the Wall Street Journal. When a range of rates has been published,
the higher of the rates will be used (the "Index") (the "Index"). The Index is
not necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the current
Index rate upon Borrower's request. The interest rate change will not occur more
often than each Day. Borrower understands that Lender may make loans based on
other rates as well. The Index currently is 4.000%. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 0.750
percentage points over the Index, resulting in an initial rate of 4.750%.
NOTICE: Under no circumstances will the interest rate on this Note be more than
the maximum rate allowed by applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
"paid in full", "without recourse", or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
"payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: UNITED NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, 2090
HUNTINGTON DRIVE SAN MARINO, CA 91108.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment. INTEREST AFTER
DEFAULT. Upon default, the variable interest rate on this Note shall immediately
increase to 5.750 percentage points over the Index, if permitted under
applicable law.


DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note: Payment Default. Borrower fails to make any payment
when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of
the related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.

Default in Favor of Third Parties. Borrower or any Grantor defaults under any
loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person that
may materially affect any of Borrower's property or Borrower's ability to repay
this Note or perform Borrower's obligations under this Note or any of the
related documents.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Note
or the related documents is false or misleading in any material respect, either
now or at the time made or furnished or becomes false or misleading at any time
thereafter.

Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of

Borrower's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any guaranty of the indebtedness evidenced by this Note. In the event of a
death, Lender, at its option, may, but shall not be required to, permit the
guarantor's estate to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.

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Loan No: 92018206                 PROMISSORY NOTE                         Page 2
                                    (Continued)
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Change In Ownership. Any change in ownership of twenty -five (25%) or more of
the common stock of Borrower, unless approved in writing by Lender.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of this
note is impaired
Insecurity. Lender in good faith believes itself insecure.

Cure Provisions. If any default, other than a default in payment is curable and
if Borrower has not been given a notice of a breach of the same provision of
this Note within the preceding three (3) months it may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (1) cures the default within fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.

EFFECT OF AN EVENT OF DEFAULT. If any Payment Default shall occur except where
otherwise provided in this Agreement or the Related documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the related documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an electron to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies. If any Event
of Default, other than Payment Default, shall occur or in the event the borrower
is in violation of the covenants and the Bank decides to call the subject
facility. Then the Borrower will be given six months to pay off the subject
facility, at 1/6 of the outstanding balance each month till termination. If
Borrower is able to secure another line of credit upon notification of
termination, the new line must be used to pay off Borrower's existing Facility
with Bank.

EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that in Lender's
opinion are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, wit out limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of  California. This Note
has been accepted by Lender in the State of California.

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory,
chattel paper, accounts, equipment, general intangibles, consumer goods and
fixtures described in a Commercial Security Agreement dated August 15, 2003.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following persons currently are authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
their authority: TONY SHAHBAZ and STEVE GILLINGS. Borrower agrees to be liable
for all sums either: (A) advanced in accordance with the instructions of an
authorized person or (B) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under this
Note if: (A) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (B) Borrower or
any guarantor ceases doing business or is insolvent; (C) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Lender; (D) Borrower has applied
funds provided pursuant to this Note for purposes other than those authorized by
Lender; or (E) Lender in good faith believes itself insecure.

BUSINESS LOAN AGREEMENT (ASSET BASED). This Note is the Note referred to in the
Business Loan Agreement (ASSET BASED) dated August 15,2003, between the Borrower
and Bank, as at any time amended (the "Business Loan Agreement (ASSET BASED)").
Notwithstanding the paragraph entitled "DEFAULT" above, and in addition thereto,
upon the occurrence of an event of default as defined in the Business Loan
Agreement (ASSET BASED), all sums of principal and interest the remaining unpaid
shall become due and payable, as provided in the Business Loan Agreement.

SUCCESSOR INTERESTS. The terms of this Note shall. be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and Its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: UNITED NATIONAL
BANK, A NATIONAL BANKING ASSOCIATION 2090 HUNTINGTON DRIVE SAN MARINO, CA 91108

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive any applicable statute of limitations, presentment, demand
for payment, and notice of dishonor. Upon any change in the terms of this Note,
and unless otherwise expressly stated in writing, no party who signs this Note.
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

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Loan No: 92018206                  PROMISSORY NOTE                        Page 3
                                    (Continued)
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PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

I/OMAGIC CORPORATION

By: /s/ Tony Shahbaz                              By: /s/ Steve Gillings,
TONY SHAHBAZ, President of I/OMAGIC CORPORATION   STEVE GILLINGS, Chief
                                                  Financial Officer of
                                                  I/OMAGIC CORPORATION

LENDER:

UNITED NATIONAL BANK

/s/ Alison Wu
Authorized Signer